Why Environmental Regulation is Good for the Economy

November 08, 2016

Climate change is happening and cannot be ignored—most of the world’s scientists agree. The increasing temperatures, sea levels, and carbon dioxide emissions are a concern and cannot be dismissed. The U.S. government agrees, and has passed many environmental regulation laws to curb these effects. Though these laws protect the environment, they have an impact on businesses and the economy.

By Hannah Li

Donald Trump does not believe in man-made climate change. He described it in an interview as “a very, very expensive form of tax. A lot of people are making a lot of money” [1]. In tweets, he has repeatedly called it nonexistent and a hoax and stated that it was “created by and for the Chinese in order to make U.S. manufacturing non-competitive” [1]. Though he later clarified that his comment about the Chinese creating climate change was a joke, his stance on the matter is very clear and set.

The Republicans have called into question many of the Environmental Protection Agency’s (EPA) regulations, and some have even gone as far as rallying to repeal the agency entirely. Trump has described the EPA as being a waste of money because “they aren’t doing their job, they are making it impossible for our country to compete” [2]. He went further to say that they are “going around causing damage as opposed to saving damage”, leading to “a tremendous amounts of money, tremendous fraud, tremendous abuse”[2]. His rhetoric towards climate change and the EPA isn’t based on facts, and his threats against the EPA and ignorance of climate change are concerning. As the potential President of the United States, he has the power to carry them out, and existing support from Republicans in Congress would help further his agenda.

But does environmental regulation actually hurt the economy? There are compliance costs that businesses have to bear that can lead to higher prices, as well as job loss costs. In the first fifteen years after the implementation of the Clean Air Act in, about half a million jobs moved from counties with plants that were out of compliance to neighboring counties where the plants met the standards [3]. These job losses, however, have been insignificant on a macroeconomic level compared to the overall number of jobs lost, suggesting that environmental regulation encourages job mobility within countries. In fact, environmental regulation actually creates jobs by requiring prevention efforts and pollution clean up. An EPA-mandated clean up of the Chesapeake Bay is “anticipated to create 35 times as many jobs as the proposed construction of the Keystone XL pipeline”, and “jobs in the coal industry actually increased by 10 percent after the EPA cracked down on mountaintop-removal mining in 2009” [4]. An independent, nonpartisan analysis by the Economic Policy Institute (EPI) found that net job gains from the Mercury and Air Toxics Standards (MATS), which was proposed by the EPA, would reach 117,000 to 135,000 in 2015 [4].

The economic, technological, and health benefits of environmental regulation greatly outweigh the costs. The costs of environmental regulation do not significantly change overall productivity, or GDP. A rule of thumb for comparing the two says “a 10% change in the oil price is associated with a 0.2% change in GDP” [5]. If green taxes, which are taxes on services or products that are not environmentally friendly, increase oil prices by only a few cents, then the impact on GDP would be minimal. The desire to comply with green rules and avoid paying green taxes would also encourage businesses to invest in innovations and efficiencies in green technology more than they would have otherwise, helping economies shift towards greener practices. Most importantly, environmental regulation saves the economy billions by preventing the negative health effects associated with pollution. Air and water pollution cause many illnesses, such as respiratory diseases, cancers, heart attacks, infections, poisonings, etc., that require billions in health care costs each year to treat. The estimated health benefits from the Clean Air Act are “two orders of magnitude greater than the employment costs of the policy” [6]. In monetary terms, the EPA has produced as much as $640 billion in benefits and only $45 billion in costs on the economy over the last decade [4]. However, monetary benefit cannot compare to health benefits: healthier and more productive citizens who are living longer. These citizens can go to work and contribute to society instead of receiving treatment for preventable illnesses caused by pollution. As for the environment as a whole, fewer species will go extinct from climate change and there would be fewer natural disasters, which also costs billions of dollars to clean up.

The United States has made great strides towards being more environmentally friendly, so it would be devastating if Trump were to repeal environmental regulation or eliminate the EPA. Continuing to emit similar, or greater amounts, of pollution for the next four years would mean foggier skies, air that would be harder to breathe, increased human illnesses, contaminated water and food, and extinction of more and more species. Trump might not believe in climate change, but he is a businessman who would capitalize on a plan that saves or earns money. If science can’t convince him to support environmental regulation, then maybe economic gain will.

<h3>Internal Revenue Service: Tax Statistics</h3><p><img width="155" height="200" alt="" src="/live/image/gid/4/width/155/height/200/486_irs_logo.rev.1407789424.jpg" class="lw_image lw_image486 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/155/height/200/486_irs_logo.rev.1407789424.jpg 2x" data-max-w="463" data-max-h="596"/>Find statistics on business tax, individual tax, charitable and exempt organizations, IRS operations and budget, and income (SOI), as well as statistics by form, products, publications, papers, and other IRS data.</p><p> Quick link to <strong>Tax Statistics, where you will find a wide range of tables, articles, and data</strong> that describe and measure elements of the U.S. tax system: <a href="http://www.irs.gov/uac/Tax-Stats-2" target="_blank">http://www.irs.gov/uac/Tax-Stats-2</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>

<h3>National Center for Education Statistics</h3><p><strong><img width="400" height="80" alt="" src="/live/image/gid/4/width/400/height/80/479_nces.rev.1407787656.jpg" class="lw_image lw_image479 lw_align_right" data-max-w="400" data-max-h="80"/>The National Center for Education Statistics (NCES) is the primary federal entity for collecting and analyzing data related to education in the U.S. and other nations.</strong> NCES is located within the U.S. Department of Education and the Institute of Education Sciences. NCES has an extensive Statistical Standards Program that consults and advises on methodological and statistical aspects involved in the design, collection, and analysis of data collections in the Center. To learn more about the NCES, <a href="http://nces.ed.gov/about/" target="_blank">click here</a>.</p><p> ﻿Quick link to NCES Data Tools: <a href="http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4" target="_blank">http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4</a></p><p> Quick link to Quick Tables and Figures: <a href="http://nces.ed.gov/quicktables/" target="_blank">http://nces.ed.gov/quicktables/</a></p><p> Quick link to NCES Fast Facts (Note: The primary purpose of the Fast Facts website is to provide users with concise information on a range of educational issues, from early childhood to adult learning.): <a href="http://nces.ed.gov/fastfacts/" target="_blank">http://nces.ed.gov/fastfacts/#</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>

<h3>The Penn World Table</h3><p> The Penn World Table provides purchasing power parity and national income accounts converted to international prices for 189 countries/territories for some or all of the years 1950-2010.</p><p><a href="https://pwt.sas.upenn.edu/php_site/pwt71/pwt71_form.php" target="_blank">Quick link.</a> </p><p>See all <a href="/data-resources/">data and resources</a> »</p>

<h3>National Bureau of Economic Research (Public Use Data Archive)</h3><p><img width="180" height="43" alt="" src="/live/image/gid/4/width/180/height/43/478_nber.rev.1407530465.jpg" class="lw_image lw_image478 lw_align_right" data-max-w="329" data-max-h="79"/>Founded in 1920, the <strong>National Bureau of Economic Research</strong> is a private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of how the economy works. The NBER is committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community.</p><p> Quick Link to <strong>Public Use Data Archive</strong>: <a href="http://www.nber.org/data/" target="_blank">http://www.nber.org/data/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>

<h3>Congressional Budget Office</h3><p><img width="180" height="180" alt="" src="/live/image/gid/4/width/180/height/180/380_cbo-logo.rev.1406822035.jpg" class="lw_image lw_image380 lw_align_right" data-max-w="180" data-max-h="180"/>Since its founding in 1974, the Congressional Budget Office (CBO) has produced independent analyses of budgetary and economic issues to support the Congressional budget process.</p><p> The agency is strictly nonpartisan and conducts objective, impartial analysis, which is evident in each of the dozens of reports and hundreds of cost estimates that its economists and policy analysts produce each year. CBO does not make policy recommendations, and each report and cost estimate discloses the agency’s assumptions and methodologies. <strong>CBO provides budgetary and economic information in a variety of ways and at various points in the legislative process.</strong> Products include baseline budget projections and economic forecasts, analysis of the President’s budget, cost estimates, analysis of federal mandates, working papers, and more.</p><p> Quick link to Products page: <a href="http://www.cbo.gov/about/our-products" target="_blank">http://www.cbo.gov/about/our-products</a></p><p> Quick link to Topics: <a href="http://www.cbo.gov/topics" target="_blank">http://www.cbo.gov/topics</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>

<h3>Federal Reserve Economic Data (FRED®)</h3><p><strong><img width="180" height="79" alt="" src="/live/image/gid/4/width/180/height/79/481_fred-logo.rev.1407788243.jpg" class="lw_image lw_image481 lw_align_right" data-max-w="222" data-max-h="97"/>An online database consisting of more than 72,000 economic data time series from 54 national, international, public, and private sources.</strong> FRED®, created and maintained by Research Department at the Federal Reserve Bank of St. Louis, goes far beyond simply providing data: It combines data with a powerful mix of tools that help the user understand, interact with, display, and disseminate the data.</p><p> Quick link to data page: <a href="http://research.stlouisfed.org/fred2/tags/series" target="_blank">http://research.stlouisfed.org/fred2/tags/series</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>